Pillar 1 Is Dead, and Pillar 2 Doesn’t Feel So Well Either: The Case for BEFIT

Pillar 1 was supposed to reallocate taxing rights for a digitalized economy. It is now politically moribund. Pillar 2 has moved ahead, but without its counterpart, the result is an unbalanced architecture: a minimum tax without a convincing theory of where profits should be taxed. The OECD compromise has therefore not solved the central problem of international tax egislation, and judicial enforcement. In that setting, Business in Europe: Framework for Income Taxation (BEFIT) — the European Commission’s proposal for a common framework to determine the tax base of large corporate groups operating in the internal market — may represent something larger than administrative simplification: the first credible attempt to reconnect tax base, nexus, and allocation within a legally enforceable order.1 If pillar 1 is dead, the real question is no longer how to revive it but where a workable successor can be built. law. It has exposed it. This article argues that the bigger mistake was one of sequence. Policymakers tried to allocate profits before agreeing on how to measure them. Once tax bases remain fragmented across domestic systems, redistribution becomes a permanent source of conflict. Hence, the central point: There can be no stable and proportionate taxation of multinational groups without prior alignment of the rules governing their global taxable base. From that premise, the article turns to the European Union. The EU is important not because it is European but because it is the only existing framework combining a common market, binding